On the back of a bunch of strong fundamental data in the recent month and hawkish comments from the RBA, the Australian Dollar moved back into the "uncomfortably high" level. Nonetheless, it seems that Australian companies are not buying into Stevens' pledge, as business confidence deteriorated in March.
A report from the National Australia Bank showed that a gauge of business confidence eased to 4 last month from February's reading of 7. At the same time, the index of current conditions improved slightly, with the measure rising to 1 from 0 a month earlier. While both indexes and above the zero level and suggesting improving conditions, a recent drop in the outlook is adding more pressure on the RBA to maintain its ultra-loose stimulus programme with record-low interest rates. A vast majority of industries recorded improving business conditions over the period, while only transportation, utilities and wholesales posted losses. What is more important, is the fact the key mining sector was the least confident among sectors, bolstering the case the central bank should look for other sector that can become economy's main driver. Responses from the RBA have been somewhat successful until now, as record-low interest rate helped to drive up the demand for housing and led to strong growth in the construction sector. Meanwhile, job security remains a number-one priority for households.
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